MARKET CLOSE: NZX 50 rises to record high; Air NZ gains as oil falls, SkyTV extends slide

Tuesday 10th May 2016

New Zealand shares rose, pushing the S&P/NZX 50 Index to a record high as Air New Zealand and A2 Milk gained while Sky Network Television extended its slide.

The S&P/NZX 50 Index rose 24.36 points, or 0.4 percent, to 6,909.41. Within the index, 26 stocks fell, 15 gained and eight were unchanged. Turnover was $151.5 million.

Air New Zealand rose 2.6 percent to $2.36. It's fallen 22.2 percent this year, tracking lower after it hit a 13-and-a-half year high in January when oil prices hit record lows. Matt Goodson, managing director at Salt Funds Management, said weaker oil prices overnight were probably the key to the airline's improvement today.

A2 Milk Co gained 5.7 percent to $1.87, Genesis Energy rose 2.2 percent to $2.14, and Metro Performance Glass advanced 1.7 percent to $1.75.

Sky TV stayed on its downward track, down 2.1 percent to $4.21, having tumbled almost 22 percent in the previous two trading days after saying subscriber numbers were expected to fall further this financial year, causing earnings next year to miss analyst estimates. The pay-TV operator forecast it would have 830,000 subscribers at the end of its financial year on June 30. Subscriber numbers dropped 1.5 percent last year to 851,561. It expects to lose 45,000 core residential pay-TV subscribers this year and gain about 25,000 subscribers for its online services such as Neon and FanPass.

"It's still very much under pressure but you have to remember it's about where it started from when the exchange traded funds-related buyers started," Goodson said. "A fair bit of that move into the high fours and low-to-mid fives was driven by, if you like, machine-driven buying by exchange-driven funds rather than buying focussed on the fundamentals of the company. It might start to find some stability sometime soon, but the valuation is very sensitive to assumptions around future subscriber loss."

Dual-listed banks gained on both sides of the Tasman, with Australia & New Zealand Banking Group up 2.7 percent to $26.80 and Westpac Banking Corp gaining 2.4 percent to $34.16. The Australian S&P/ASX 200's banks were led by Commonwealth Bank of Australia, up 2.5 percent at 5:20pm New Zealand time. The financial institutions have suffered as they've revealed more extensive bad debts over the past month but recovered today amid weakness in commodities which drove money out of mining and energy stocks on the ASX.

New Zealand Refining dropped 3.9 percent to $2.69, and Steel & Tube Holdings fell 1.4 percent to $2.15.

Spark New Zealand declined 1.3 percent to $3.69. It will take over the naming rights for Auckland's 12,000-seat Vector Arena starting in April 2017, re-naming the venue the Spark Arena. It declined to say what the cost of the contract was, citing commercial sensitivity. Vector, which had held the rights for 10 years, fell 0.6 percent to $3.48.

Comvita rose 1.7 percent to $12.20. The manuka honey company boosted annual profit 68 percent as Australian sales soared, overtaking New Zealand as its largest market. The shares have tripled in the past year, hitting a record high $12.40 last month, on demand for products such as manuka honey and olive leaf extract.

APN News & Media, which is listed on the ASX and NZX, remained halted at 72 cents. The trading halt was put in place ahead of APN's annual meeting tomorrow, and reflects a potential material transaction involving the New Zealand assets, the company said this week.

"APN is trading a fair bit below the sum-of-parts valuations of most analysts, but those valuations are very much dominated by their radio businesses and their share of the outdoor advertising business," Goodson said. "The market is attributing very little in the way of value to the old media businesses, so we'll have to see how that plays out."

BusinessDesk.co.nz

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